Wolfe: Ahead of the Pack

08/05/2005 12:00 am EST


Josh Wolfe

Editor, Forbes/Wolfe Emerging Tech Report

When it comes to nanotech, few are as "in the know" as Josh Wolfe. Thus, it's no surprise when Wall Street firms initiate coverage of stocks that he has already been following for years. Here's a trio of nanotech ideas from his Buy list that are attracting Wall Street coverage.

"Symyx (SMMX NASDAQ) is involved in novel materials discovery. It is producing nanoscale materials with properties that have applications across a wide range of industries. WR Hambrecht initiated coverage with a Buy rating. Symyx has doubled its sales force in the last eight months and already has commitments from ExxonMobil and Dow for at least $320 million over five years. Symyx is trading at 47 times Hambrecht's 2006 earning per share estimate of $0.59, but the investment bank sees upside to current estimates. If royalties come in 20% higher, earnings per share could move up to $0.68. We continue to rate the stock a buy.

"Accelrys (ACCL NASDAQ) is involved in molecular rendering and analysis software. In other words, the company is developing software to visualize, model, and simulate matter and activity at the nanoscale. Accelrys shares sagged bringing them into deep value territory. The stock's current $126 million market cap is comprised of more than 50% cash ($63 million). WR Hambrecht initiated coverage of Accelrys with a Hold rating, saying that it liked Accelrys' software focus and business model but felt the company is still in turnaround mode. In our opinion, we continue to rate the company a Buy. With ACCL's switch to subscription accounting now more than a year old, investors will continue to see strong year-over-year comparisons.

"WR Hambrecht also initiated coverage of FEI Corp. (FEIC NASDAQ) with a Buy rating and a $27 price target. The company is a nanotech instrument maker. The reason for its Buy rating is the company's new Titan product line, which is due to launch on August 1, should drive sales in the second half of 2005. The Titan product line will have the best resolution in the world at under 0.7 Angstrom (0.07 nanometers). Thomas Weisel also reiterated its Outperform rating based upon improving semi and data storage end markets. FEI currently trades at a price/sales of 1.8x versus 2.6x for its peers. We continue to rate the stock a Buy."

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